On April 1, 2020, SobelCo hosted a webinar featuring Alan Sobel, Bridget Hartnett, Tara Del Gavio and Kristen Crouchelli who addressed some of the key features in the newest legislation addressing the economic challenges facing nonprofits in the wake of COVID-19.

The goal of the one hour session was to condense some of the more essential points and help nonprofit leaders make sense of the tools and resources that are now available, or are becoming available shortly. 

Paycheck Protection Program (Emergency SBA 7a)

Loans are top of mind for most nonprofits, and this is particularly designed to help organizations retain staff and cover certain operating costs during what ultimately is an eight week period.

Why it matters

Typically nonprofits would not qualify for an SBA loan, so this legislation is extremely important because under this program certain nonprofits organized under 501 c 3 and 501 c 19 (veterans’ organizations) are included that have 500 or fewer employees (keep in mind affiliates may count) and are in operation on 2/15/20 and have paid employees.

How much is available?

For those organizations that are eligible, the loan amount can be equal to the lesser of $10million or 2.5 times the average monthly payroll costs from a one year look back or 2019 payroll. 

How can the loan be used?   

The loan can be used for payroll costs including paid sick or medical leave, mortgage interest, rent, utilities, and interest on prior debt during the eight -week period following origination.  * Payroll costs are capped at $100K.

How does the forgiveness aspect apply?

An organization can have the whole or part of the loan forgiven, IF the organization maintains employment levels or rehires employees by June 30 and doesn’t reduce salaries by more than 25%.  If they do this, they can apply to have the loan forgiven, essentially turning into a grant. 

Program is open until June 30, but apply ASAP!


Under the CARES Act, the Existing Economic Injury Disaster Loan (EIDL) program was expanded.

During the webinar, attention also turned to the Small Business Administration’s EIDL program, which is an additional funding mechanism for nonprofits with 500 or fewer employees under 501 c3 as well as those not eligible under PPP.  This includes 501 c4 and 501 c6 Organizations.  Under the CARES Act certain requirements are being waived:

  • Personal guarantee up to 200K
  • That the NPO was in operation over a year
  • The NPO not be able to obtain credit anywhere else 

How much is available?

For nonprofits, loans are available for up to $2 million at, 2.75% interest rate with long term payment terms of 30 years.  Applicants may receive and emergency $10K advance to use for payroll, rent and mortgage payments that should be provided within three days of applying. Even if the application is denied, the organization would not have to pay this advance back. 

Although the panelists spent some time addressing programs available to organizations with less than 500 employees, they also spoke to a program available to those organizations that have between 500-10,000 employees. Under this loan, there is no forgiveness, however interest would be capped at 2% and payments deferred for six months.

The loan is intended to help maintain 90% of workforce at full wages and benefits through 9/30/20 and to restore 90% or workforce in place on 2/1/20.

The CARES Act is multi-faceted and very complex. Throughout the webinar, other areas were touched upon including the Employee/Retention Payroll Tax Credit. 

Families First Coronavirus Response Act (FFCRA)

  • FFCRA is effective 4/1/20 and will apply to leave taken between 4/1/20 and 12/31/20
  • The nonprofit must have fewer than 500 employees – this includes any state in the US, DC or any US Territory.
  • If you have less than 50 employees, document why your business meets the criteria set for by the Department (more information is forth coming)
  • Employees eligible must have been employed for at least 30 calendar days by employer  
  • OT is not calculated in determine pay due to employees 

Also discussed on the webinar were Paid Sick Leave and Expanded Family and Medical Leave as well as other details under Families First. 

Paid Sick Leave (PSL)

The guidelines state that:

  • Paid sick leave is to be paid only up to 80 hours over a two week period 
  • Pay does not need to include a premium for overtime (OT) hours under PSL or Family and Medical Leave Act (FMLA)
  • Employees can take full compensation up to a rate of $511 per day (not to exceed $5110 total) if they are:
    • Subject to quarantine or isolation order
    • Advised to self-quarantine
    • Experiencing symptoms of COVID-19 and seeking medical diagnosis
  • Employees are entitled to compensation at two-thirds pay at a rate up to $200 per day (not to exceed $2000 total) if they are:  
    • Caring of an individual subject quarantine or isolation order
    • Caring for child whose school or child care center is closed/unavailable due to COVID-19 reasons
    • Experiencing any other substantially-similar condition

Expanded Family and Medical Leave

The guidelines state that:

  • Employees can take paid sick leave for the first ten days of period or take any accrued leave

During the next ten weeks – they will be paid at two-thirds of their regular rate for hours normally worked – but will not exceed $200 per day or $12K for total 12 weeks between sick and FMLA

  • Employers cannot deny employees paid sick leave for any of the reasons above
  • Requirements are not retroactive to April 1, 2020
  • If there is an intention to claim tax credit – retain appropriate documentation in records to substantiate credits.  Employees can be asked to provide additional documentation (i.e. notice from school to confirm it is closed)
  • If employee are allowed to work remotely, they should be paid at normal wages, and not under the Family and Medical Leave Act.  However, if they are unable to telework because of any of the reasons above, they are entitled to take leave
  • Can be taking intermittently while teleworking if an employer allows it 
  • If an employer closed the worksite before April 1, 2020 and stops paying employees – the employees are not eligible for sick leave or FMLA.  They may be eligible for unemployment benefits.  In addition, if the employer is paying employees under a different leave policy, they are not entitled to unemployment.  If the business closes while employees are on leave, they are eligible for benefits through the day the business  closed and then they can get unemployment benefits
  • Employees are being tested or treated for COVID-19 If employees are furloughed or their hours are reduced, they are not eligible under the Leave Act but may be able to collect unemployment
  • Employees are not eligible if they have taken any other type for FMLA in the last 12 months.
  • The FFCRA also provides for 100% health insurance coverage from medical facilities if employees are being tested or treated for COVID-19

The final topic on this webinar addressed the importance of managing cash flow.  

Tara Del Gavio shared some critical suggestions with the nonprofit community, including:

  • Understand the organization’s cash position. Is revenue slow or on hold?  A cash projection is critical and should be utilized.  An example provided by the Nonprofit Finance Fund can be found at https://nff.org/fundamental/cash-flow-projection-template
  • Assess the impact on the organization’s programs.  Are the programs shut down because capacity decreased?  Are expenses being cut in accordance with the decrease in revenue?
  • All organizations should make time to communicate with donors and keep them informed of challenges.
  • Nonprofits are going to have to consider creative/different way of fundraising.  Will a virtual gala work?  Should the organization be sending/paying for a mail appeal campaign at this time?
  • Keep in touch with the organization’s key advisors, most especially with the bank. Check in; identify ways the organization and the bank can work together. Perhaps there are programs immediately available to be leveraged.
  • Discuss cash flow considerations with the organization’s vendors and cooperate in order to enter into possible payment plans, etc. to help manage cash flow during a very tough situation.
  • Review the organization’s payroll and carefully consider which employees are most critical.  But as the organization is looking at short and long term plans, it is important to remember that some of the loan assistance plans and programs that are being put into place are created especially to encourage organizations to maintain their staff and refrain from firing or furloughing any employees if possible.

This brief overview offers some of the main points raised during the webinar. For further details, we encourage you to visit our website to download the webinar in its entirety.